I spent most of my time relaxing this past holiday season. My days were filled with playing card games, watching the fireplace, and catching up on sleep. One of the new card games that I picked up was called Cribbage, or crib for short (the rules for those of you who are interested). As I played more crib, I noticed a deeper game of hedging and calculating risks. I wondered what it took to win.
Crib is divided into two scoring stages, which I view as two sub games. I learned to throw out cards that would maximize my points in one of the scoring stages. For example, I kept low cards to gain points during “play,” when I know that my “show” won’t total to fifteen. When it was my crib, I intentionally threw out cards to build a better second hand. Using these tactics allowed me to roughly calculate the number of points I would receive and the risk I would want to take on before each game started.
Amidst all this, I started to realize that there were a lot of parallels to starting and running a company. Many people regard entrepreneurship as gambling on a company, especially considering entrepreneurs are often labeled as “risk takers”. However, entrepreneurs take calculated risks. Just like a game of crib, entrepreneurs run through scenarios, calculating the “points” they can gain and what risks they want to take.
Elon Musk once said, “Business is like a multidimensional probabilistic chessboard.” Taking calculated risks doesn’t prevent anyone from failing, but it increases the potential impact. The art of calculating risks is a whole other topic, but one thing is certain: entrepreneurs are not just risk takers, entrepreneurs are calculated risk-takers and that’s a big difference.
Photo credit: Richard Herold